LEGISLATORS NOT HURRYING TO TRY BREWING TAX STEW PALATABLE TO ALL

Faced with the question of where to cut taxes, the 1989 Legislature has yet to begin stirring up a concoction that will magically transform every taxpayer into a happy constituent.

The issue remains on the back burner as lawmakers wait to hear how much money the state took in last year. The report, due in mid-February, is needed to make more accurate projections for the upcoming fiscal year."We won't fly by the seat of our pants," said Senate President Arnold Christensen, R-Salt Lake, who has asked legislative staff to come up with ways property tax could be reduced.

House Democrats are using the time to decide whether to support a proposal from Democratic Party officials to go along with tax limitation advocates and take the sales tax off food.

Also being considered by both Republicans and Democrats is changing the deduction on state income tax returns for federal income taxes paid. Members of the GOP have proposed raising it while some Democrats want to eliminate it.

The best estimates available show the state raising between $84 million and $106 million in additional revenues in the fiscal year that begins July 1.

Gov. Norm Bangerter, whose budget is based on the more conservative estimate, has recommended returning $19 million of the projected surplus to taxpayers.

The governor has not, however, specified how. That leaves lawmakers, who all seem to agree some kind of tax cut will be made this session, scrambling for the right taxing formula.

The debate is likely to divide along party lines, although neither Republican nor Democratic leadership in either House has taken a position on where taxes should be cut.

Tax limitation advocates want sales taxes taken off food. Their first try at shaping tax policy following the defeat of their tax initiatives is being supported by the Democratic Party but not all Democrats in the Legislature.

Party officials, who want to bring tax initiative supporters into the fold, have their own plan for pleasing them and making sure the traditional Democratic commitment to funding social programs is not jeopardized.

Minority Whip Frank Pignanelli, D-Salt Lake, said some Democratic party officials are suggesting that Utahns should no longer be able to deduct any of their federal income taxes paid on their state income tax returns.

That, combined with the governor's $19 million tax increase and another $20 million they anticipate in additional tax revenues, would cover the estimated $60 million to $80 million cost of removing the sales tax from food.

Several bills to remove the sales tax from food have been introduced. Rep. Blaze Wharton, D-Salt Lake, executive director of the state Democratic Party, has proposed doing just what the tax limitation advocates want: removing all of the sales tax from food at once.

No legislation has been formally proposed to eliminate any state deduction for federal income taxes paid, which would be of the most benefit to the wealthiest Utahns.

Such a proposal would get no support from the majority party in the Legislature, the Republicans. Lawmakers restored one-third of the deduction in a special session last year and a bill has been introduced by Sen. Bill Barton, R-West Valley City, to raise the deduction to two-thirds.

"We just want to stop them from going to 50 percent," said House Minority Leader Mike Dmitrich, D-Price. The $19 million tax cut proposed by the governor would allow the deduction to be restored to 50 percent.

As for property taxes, at least two of the property tax bills introduced so far would help only the poorest Utahns by raising the amount of homeowner credits available through the circuit breaker program.

Another bill, introduced by Sen. Haven J. Barlow, R-Layton, would reduce the fair-market value of residential property by 30 percent next year, 35 percent in 1991 and 45 percent in 1993.

The current amount deducted for so-called intangible expenses associated with buying and selling a home is 25 percent. Taxes are assessed on a property's fair market value.